From Globalism to America First Geoeconomics
Trump continues to provide a stronger paradigm for American economics in 2024.
With the recent emergence of two adversarial geopolitical blocs, the fantasy of a “liberal world order,” which is currently driving President Joe Biden’s foreign economic policy, must be buried. The old globalist geoeconomic policies are nothing short of a security risk in the tense geostrategic environment created by the revisionist and expansionist actions of the authoritarian bloc of China, Russia, Iran, and North Korea.
While the Biden administration did keep in place Trump’s tariffs and introduced some additional trade restrictions against China, it also gutted semiconductor export controls with indefinite exemptions for several of the world’s largest chip-makers and its “small yard, high fence” policy is not far-reaching enough to confront China. We are not seeing today the decisive policy adjustments demanded by this historical moment. It is time for an America First geoeconomic strategy: A comprehensive plan for America’s foreign economic relations that starts with the successful policies of the Trump administration but expands and adapts them to reflect today’s sharpened conflict with the authoritarian bloc.
To members of the global economic elites and the Washington foreign policy establishment alike, Trump’s economic policies are heresy. He challenges China with tariffs and decoupling, he wants to increase oil and gas production and eliminate subsidies for green energy, and he promises to stop illegal immigration and deport massive numbers of illegal aliens. Such policies are not only at odds with the liberal internationalist grand strategy of the post-Cold War era but, its critics argue, also plainly wrong and self-defeating from a cost-benefit perspective according to traditional economic models.
Nevertheless, Trump’s policies make perfect sense when one progresses from a narrow economic analysis to incorporate strategic considerations, or what national security experts refer to as geoeconomics. In plain English, Trump’s foreign economic policies are solidly grounded in both foreign security and domestic prosperity American interests. They introduce essential economic adjustments to account for foreign security threats. The former National Security Adviser Robert O’Brien makes the same point persuasively in a recent article: Trump’s economic policies are sharply focused on increasing the prosperity of the American people and not on solving “global challenges” as liberals would prefer. After all, as the 2017 National Security Strategy aptly put it, “economic security is national security.”
Trump’s three most consequential and controversial economic policies were decoupling selectively from China, pursuing American energy dominance, and cracking down on illegal immigration. All three should be revived and expanded in a second Trump term.
First, the most important strategic challenge facing the United States today, and likely in its history, is China’s quest for Asian and eventually global hegemony. In response, the United States must urgently decouple from China in all national security-related sectors and, over time, selectively in other areas as well. The Biden administration’s weaker versions of this policy, like “de-risking”, are too timid. The U.S. and China are in a new cold war, not merely in a “competition,” as the Biden administration calls it. As Oren Cass has warned, many Washington policymakers and business leaders wrongly assume that the U.S. and China can still have an economically symbiotic relationship despite their incompatible geostrategic goals: “No one considered seriously an integration of the American and Soviet economic systems. We only countenanced a coupling with China because we assumed wrongly that it would lead to [China’s] economic and political liberalization.”
There are several policy options for Washington to decouple its economy from Beijing’s in a way that minimizes economic costs to U.S. consumers and businesses. First, the U.S. should increase domestic production of strategically important products such as microchips and semiconductors. Second, when manufacturing in the U.S. is not feasible, Washington should reconfigure global supply chains through “friend-shoring.” In order to eliminate Chinese companies from the supply chains, the U.S. and its partners should incentivize and pressure corporations in strategic industries to shift production out of China and to other lower-cost countries. The apparel industry has already done so in response to grave human rights violations in China. The U.S. and its allies should also help developing countries interested in hosting these companies in the design of economic incentives packages for private companies from the free world. Third and last, Washington needs to disentangle capital and investment flows between China and the United States, and enlist other Free World countries to this cause as well. As Robert Lighthizer, Trump’s U.S. Trade Representative, told Congress, China’s civil-military fusion strategy and the overt or covert control exercised by the Chinese Communist Party over Chinese companies implies that Western investments in putatively private companies end up supporting the Chinese civil-military industrial complex.
The second major area in which geopolitical calculations shape Trump’s foreign economic policy is the pursuit of “energy dominance.” Not only would lowering the cost of energy through exploitation of America’s oil and gas resources provide the American people with a cheap source of energy and lower inflation, but such a policy would also strengthen America’s geostrategic position vis-à-vis China and its expansionist partners. Trump’s energy policy starts from the fact that the United States is endowed with enormous reserves of oil and gas, and world-class industrial know-how in energy extraction, refining, and transportation. Therefore, Washington has the ability to achieve not just energy independence and security, but global energy dominance through decisive impact on world energy prices and supply.
Therefore, it should be an American priority to use its oil and gas strategic assets to advance American interests in the global energy market, an arena in which geopolitical considerations have always mattered just as much as pure commercial ones. A key element of this policy should be a recognition that fossil fuels will not be replaced in the foreseeable future by renewables. It is therefore important that the U.S. produces so much natural gas that it can also supply its European allies and help them decrease their dependence on Russian gas. This would be for the U.S. both a geopolitical win and a financial success. At the same time, the U.S. should continue to invest in the research and development of other energy resources to maintain its position at the forefront of the global energy industry.
Third and last, the Trump administration adopted strict policies on border security and immigration to keep Americans safe and prosperous. President Biden is focused on the financial benefits of migration to the overall U.S. economy and, in line with globalist tenets, on the presumed duty of Americans to raise living standards around the world. Biden encouraged the migration of millions of people, both legally and illegally. In recent speeches, former president Trump decried the current chaos at our southern border. He pointed out that it creates an acute terrorism risk and is responsible for the death of over 100,000 Americans every year through the smuggling of fentanyl and other drugs. The current illegal immigration wave also reduces the quality of life of Americans by crowding public schools, straining the medical system, and increasing criminal activity. Reinstating the border control measures of the Trump administration and initiating mass deportations of illegal aliens would reverse many of these severe risks and harsh costs imposed on the American people.
The foreign economic policies of the Trump administration blended strategic and economic considerations for the security and prosperity of the American people. It is time to abandon the current globalist approach and adopt pragmatic measures such as the ones proposed above to establish an America First geoeconomics paradigm.
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